Negotiable Instruments Law - Philippines

NEGOTIABLE INSTRUMENT Written contract for the payment of money, by its form intended as substitute for money and intended to pass from hand to hand to give the holder in due course the right to hold the same and collect the sum due

PROMISSORY NOTE

• unconditional promise in writing made by one person to another signed by the maker • engaging to pay on demand, or at a fixed or determinable future time a sum certain in money to order or to bearer • where a note is drawn to the maker’s own order, it is not complete until indorsed by him

BILL OF EXCHANGE

• unconditional order in writing addressed by one person to another signed by the person giving it • requiring the person to whom it’s addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer

• Check: bill of exchange drawn on a bank payable on demand.

Kinds of checks:
1. personal check 2. manager’s/cashier’s check – drawn by a bank on itself. Issuance has the effect of acceptance 3. memorandum check – “memo” is written across its face, signifying that drawer will pay holder absolutely without need of presentment 4. crossed check –

Effects: a. check may not be encashed but only deposited in bank b. may be negotiated only once, to one who has an acct. with a bank c. warning to holder that check has been issued for a definite purpose so that he must inquire if he received check pursuant to such purpose, otherwise not HDC Kinds:

a. general (no word between lines, or “co” between lines) b. special (name of bank appearing between parallel lines)

BEARER
Person in possession of a bill/note payable to bearer

HOLDER
Payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.

1. in writing and signed by maker or drawer • no person liable on the instrument whose signature does not appear thereon ( subject to exceptions) • one who signs in a trade or assumed name liable to the same extent as if he had signed in his own name • signature of any party may be made by a duly authorized agent, no particular form of appt. necessary

2. unconditional promise or order to pay • unqualified order or promise to pay is unconditional though coupled with a. an indication of a particular fund out of which reimbursement to be made, or a particular account to be debited with amount, or b. a statement of the transaction which gives rise to the instrument • an order or promise to pay out of a particular fund is not unconditional

a sum certain in money
• even if stipulated to be paid---
a. with interest, or
b. by stated installments, or c. by stated installments with a provision that upon default in payment of any installment/interest, the whole shall become due, or d. with exchange, whether at a fixed rate or at the current rate, or e. with costs of collection or an attorney’s fee, in case payment not made at maturity (liquidated damages)

3. payable on demand,
• when expressed to be payable on demand, or at sight, or on presentation; • when no time for payment expressed, or
• where an instrument is issued, accepted or indorsed when overdue, it is, as regards the person so issuing, accepting, or indorsing it, payable on demand

or at a fixed or determinable future time
• when it’s expressed to be payable at a fixed period after date or sight, or • on or before a fixed or determinable future time fixed therein, or • on or...

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...1. The following are essential requisites of a negotiable promissory note except
a. must be written and signed by the drawer
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable upon fixed determinable future time.
d. must be payable to order or bearer
2. Which of the following is not an essential element of a bill of exchange?
a. must be written and signed by the drawee
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable to order or bearer
d. drawee must be named therein
3. The following are negotiable except
a. “Pay to bearer Jose Cruz P 10,000 upon demand”, signed by A and addressed to B
b. “Pay to Jose Cruz or bearer P 10,000 upon demand”, signed by A and addressed to B
c. “I oblige myself to pay Pedro Reyes or order P 3,000 ten days after day signed by M as maker.
d. “Good to L or order P 5,000 July 1, 2009 signed by M as maker
4. Which of the following is negotiable?
a. “ I promise to pay Jose Cruz or order P 10,000 or deliver 1 cow 20 days after date at the option of the holder” signed by M as maker
b. “Pay to Pedro Reyes or bearer P 10,000 or deliver 1 cow on 4-4-10 at the option of the drawee”, signed by A and addressed to B
c. “Pay to Pedro C. Cruz or order P 5,000 out of fund I deposited with you” signed by A and addressed to B
d. I promise to pay K. KHO or order P 10,000 in 5 installments, first installment...

...Negotiableinstrument
From Wikipedia, the free encyclopedia
Jump to: navigation, search
A negotiableinstrument is a document contemplated by a contract, warranting (1) the payment of money, the promise of order for conveyance of which is unconditional; and, (2) which specifies or describes the payee, who is designated on and memorialized by the instrument and which is capable of change through transfer by valid negotiation of the instrument.
As payment of money is promised subsequently, the instrument itself can be used by the holder in due course as a store of value; although, instruments can be transferred for amounts in contractual exchange that are less than the instrument’s face value (known as “discounting”). Common examples include promissory notes, cheques, and banknotes. Under United States law, Article 3 of the Uniform Commercial Code as enacted in the applicable State law governs the use of negotiableinstruments, except banknotes (“Federal Reserve Notes”).
Contents
• 1 Negotiableinstruments distinguished from contracts
• 2 Classes
o 2.1 Promissory note
o 2.2 Bill of exchange
• 3 In the Commonwealth
• 4 In the United States
o 4.1 Negotiation and indorsement
o 4.2 Usage
o 4.3 Exceptions
• 5 See also
o 5.1 External links
• 6 References...

...Examples of negotiableinstruments A commercial paper is an instrument which embodies contractual rights, and the possession of the instrument is required to enforce those rights that are contained in it Although negotiableinstruments (eg bills, cheques, promissory notes, certain bearer debentures, bonds and share warrants) are categorised as commercial paper, not all commercial papers are negotiableinstruments. Examples of commercial papers which are not negotiableinstruments include bills of lading and share certiﬁcate Some negotiableinstruments can be characterised as instruments of payment (eg bills, cheques and promissory notes) whereas others can be seen as instruments of investment (eg
debentures, bonds and share warrants
CHARACTERISTICS OF NEGOTIABLEINSTRUMENTS . simplicity of transfer . the possibility of transfer free from equities Simplicity of transfer ⁃ The instruments can be transferred from one person to another with out the need to comply with difﬁcult and cumbersome formalities ⁃ transferred either by delivering them to the recipient or by sighing them ﬁrst before delivering them to the recipient ⁃ This will depend on whether it is an order or a bearer instrument Transfer free from equities Basic...

...Law Relating To NegotiableInstrument
TABLE OF CONTENTS
Acknowledgement
1. Chapter 1: Introduction
1. Objectives of the study……………...........................………………………6
2. Limitations of the study.................................................................................6
3. Research methodology………………………………………………...........7
2. Chapter 2:Law Relating to NegotiableInstrument
1. NegotiableInstrument………………………….....................…..…………8
2. Parties to NegotiableInstrument...................................................................17
3. Presentment of NegotiableInstrument..........................................................21
4. Negotiation of NegotiableInstrument...........................................................23
5. Dishonor and Discharge of NegotiableInstrument.......................................25
3. Chapter 3: Conclusion..................………………………………………....…...31
Bibliography
INTRODUCTION
Objective of the Study
The main objective of the study is to find and analysis the law relating to negotiableinstrument. After reading this report, one should get a general idea and gather knowledge of the different types of...

...2. NegotiableInstrumentsLaw (Act No. 2031)
Chapter I. INTRODUCTION
1. The NegotiableInstrument
Written contract for the payment of money, by its form intended as substitute for money and intended to pass from hand to hand to give the HDC the right to hold the same and collect the sum due. Instruments are negotiable when they conform to all the requirements prescribed by the NIL (Act 2031, 03 February 1911). Although considered as medium for payment of obligations, negotiableinstruments are not legal tender (Sec. 60, New Central Bank Act, R.A. 7653); Negotiableinstruments shall produce the effect of payment only when they have been encashed or when through the fault of the creditor they have been impaired. (Art. 1249, CC) BUT a CHECK which has been cleared and credited to the account of the creditor shall be equivalent to a delivery to the creditor of cash. Negotiable Contains all the requisites of Sec. 1 of the NIL Transferred by negotiation HDC may have better rights than transferor Prior parties warrant payment Transferee has right of recourse against intermediate parties Non-negotiable Does not contain all the requisites of Sec. 1 of the NIL Transferred by assignment Transferee acquires rights only of his transferor Prior parties merely warrant legality of title Transferee has no...

...NegotiableInstruments Act, 1881
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The NegotiableInstruments Act, 1881 |
An Act to define and Law relating to negotiableinstruments which are Promissory Notes, Bills of Exchange and cheques |
Citation | Act No. 26 of 1881 |
Enacted by | Imperial Legislative Council (India) |
Date enacted | 9 December 1881 |
Date commenced | 1 March 1882 |
NegotiableInstruments Act, 1881 was passed by British India and for over 130 years and except for amendments, the question of revising the act as a whole has never been raised.
Contents [hide] * 1 History * 2 Types of NegotiableInstruments * 3 Modern era and NegotiableInstruments * 4 Statutory Definitions * 5 Dishonour of certain Cheques for Insufficiency of Funds in Accounts * 6 Five Ingredients of the offence under Section 138 * 7 External links * 8 References |
[edit] History
The history of the present Act is a long one. The Act was originally drafted in 1866 by the 3rd India Law Commission and introduced in December, 1867 in the Council and it was referred to a Select Committee. Objections were raised by the mercantile community to the numerous deviations from the English Law which it contained. The Bill had to be redrafted...

...NO. 2031
February 03, 1911
THE NEGOTIABLEINSTRUMENTSLAW
I. FORM AND INTERPRETATION
Section 1. Form of negotiableinstruments. - An instrument to be negotiable must conform to the following requirements:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.
Section 1. Checks without sufficient funds. - Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, which check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be punished by imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less than but not more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, or both...

...NEGOTIABLEINSTRUMENTSNEGOTIABLEINSTRUMENT

According to Section 13 (a) of the Act,
“Negotiableinstrument means a
promissory note, bill of exchange or
cheque payable either to order or to
bearer, whether the word “order” or “
bearer” appear on the instrument or
not.”


A negotiableinstrument is a
document guaranteeing the payment of
a specific amount of money, either on
demand, or at a set time, with the payer
named on the document.
Examples of negotiableinstruments
include promissory notes, bills of
exchange, and cheques.
PROMISSORY NOTE


A promissory note may be a negotiableinstrument
if it is an unconditional promise in writing made by
one person to another, signed by the maker,
engaging to pay on demand to the payee, or at
fixed or determinable future time, certain in
money, to order or to bearer.
The law applicable to the specific instrument will
determine whether it is a negotiableinstrument or
a non-negotiableinstrument. Bank note is
frequently referred to as a promissory note, a
promissory note made by a bank and payable to
bearer on demand.

According to the section 4 of the INDIAN
NEGOTIABLE ACT 1881, "a Promissory
Note is an writing (not being a bank note...